Recent spills could complicate Canada's plans for more pipelines

CALGARY -- Two pipeline spills in northwest Canada are
ratcheting up scrutiny of North America's pipeline network,
amid several large, recent spills in the US and a boom in
crude production across the continent.

The Trans Mountain pipeline owned by Kinder Morgan Energy
Partners released a "small" amount of crude oil, equivalent to
about 12 bbl, in southwestern British Columbia near the town of
Kingsvale, the company said Thursday.

The spill followed Apache's
disclosure Wednesday of a pipeline spill in northern Alberta
earlier this month that released 2.5 million gallons of
contaminated water, affecting an area of about 104 acres.

The cause of both spills is under investigation by Canada's
chief federal energy regulator, the National Energy Board,
which said no injuries have been reported. These and other
pipeline accidents, along with a series of recent derailments
of trains carrying crude oil, come at a time when North
American oil production is soaring and producers scramble to
secure additional capacity to ship oil to refineries.

The issue is acute in Alberta, which depends on US
refineries to process most of its oil-sands bitumen into
gasoline and other products. Worried about dwindling capacity
to take Canadian crude to markets, executives and officials
have championed proposals for major pipeline expansions, including the Trans
Mountain pipeline and TransCanada's Keystone XL project, which the US government is
expected to issue a decision on later this year.

Kinder Morgan said in a statement that "a small amount of
light crude oil" was found on the surface of its right-of-way
as part of routine maintenance on the 300,000-bpd
pipeline, which connects the oil sands of Alberta to the
Pacific coast in Vancouver. Operating since 1953, it is the
only North American pipeline that carries both crude oil and
refined products to the Pacific coast.

The incident could complicate its plans to apply for a NEB
permit later this year to more than double the pipeline's
capacity to 890,000 bpd by 2017. It could also set back efforts
by Enbridge to build a brand new line, called Northern Gateway,
from Alberta to British Columbia's northern Pacific Coast. It
could also raise additional concerns about the controversial
Keystone XL project, which is designed to boost
oil shipments from Alberta to US refineries on the Gulf
coast.

Both Enbridge and Kinder Morgan have faced environmental and native group
opposition to their projects. The British Columbia
government recently said it couldn't support the Northern
Gateway proposal as currently envisioned, citing worry over oil
spills.

Apache first reported its spill of so-called produced water
to the NEB on June 1, but didn't report the size of the
accident until Wednesday. It said the contaminated water
released "had already been treated to remove
hydrocarbons."

Dow Jones Newswires

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